INST

INSTRUCTURE HOLDINGS INC

Technology | Mid Cap

$0.15

EPS Forecast

$169.5

Revenue Forecast

The company already released most recent quarter's earnings. We will publish our AI's next quarter's forecast around 2024-09-30
EX-99 2 inst-ex99_1.htm EX-99.1 EX-99

Exhibit 99.1

img70432607_0.jpg 

Instructure Announces First Quarter 2023 Financial Results

First Quarter GAAP Revenue of $128.8 Million Grows 13.6% Year Over Year

 

Salt Lake City, UT (May 1, 2023)—Instructure Holdings, Inc. (Instructure) (NYSE: INST), the makers of the Canvas Learning Management System, today announced financial results for the first quarter ended March 31, 2023.
 

“In the first quarter of 2023, we achieved outstanding results with $128.8 million in revenue, a 13.6% year-over-year increase and another Rule of 50 quarterly performance," said Steve Daly, Instructure CEO. "Our dedication to customer satisfaction, efficient market strategy, and innovative platform has allowed us to adapt and thrive even in a difficult macroeconomic backdrop. Looking ahead, we will continue to lead innovation in the EdTech sector while maintaining a healthy balance between growth and profitability.”

Financial Highlights:

GAAP Revenue of $128.8 million, an increase of 13.6% year over year
Allocated Combined Receipts*, or ACR, of $128.8 million, an increase of 13.1% year over year
Operating loss of $5.9 million, or negative 4.6% of revenue, and Non-GAAP operating income* of $47.2 million, or 36.6% of ACR*
GAAP net loss of $11.9 million, or negative 9.2% of revenue, and Adjusted EBITDA* of $48.3 million, or 37.5% of ACR*
Cash flow from operations of negative $80.9 million and Adjusted Unlevered Free Cash Flow* of negative $63.4 million

 

*See “Non-GAAP Financial Measures” for information regarding the Company’s use of non-GAAP financial measures as well as reconciliations to the most closely comparable GAAP measures in this press release.

 

Business and Operating Highlights:

The University of Massachusetts – Amherst selected Canvas based on a desire for a common experience for all of their students and faculty, whether they were engaged in a traditional, in-person, online or non-traditional education.
 
Sioux Falls School District selected Canvas LMS, Canvas Studio, and the full suite of Mastery products due to our comprehensive solution, customization capabilities, and our ability to migrate their district benchmark data to Mastery Connect.
 
The Dutch Institute for Public Safety (NIPV) selected Canvas due to our proven track record of integrating Canvas into customers' existing enterprise architecture, coupled with our experience in both higher education and continuing education.

 


Business Outlook

Based on information as of today, May 1, 2023, the Company is issuing the following financial guidance.

Second Quarter Fiscal 2023:

Revenue is expected to be in the range of $128.5 million to $129.5 million
Non-GAAP operating income* is expected to be in the range of $47.3 million to $48.3 million
Adjusted EBITDA* is expected to be in the range of $48.5 million to $49.5 million
Non-GAAP net income* is expected to be in the range of $26.0 million to $27.0 million

Full Year 2023:

Revenue is expected to be in the range of $521.3 million to $525.3 million
Non-GAAP operating income* is expected to be in the range of $194.8 million to $198.8 million
Adjusted EBITDA* is expected to be in the range of $199.4 million to $203.4 million
Non-GAAP net income* is expected to be in the range of $110.9 million to $114.9 million
Adjusted Unlevered Free Cash Flow* is expected to be in the range of $202.5 million to $206.5 million

 

*Non-GAAP operating income, Adjusted EBITDA, non-GAAP net income and Adjusted Unlevered Free Cash Flow are non-GAAP measures. Instructure is unable to provide guidance, or a reconciliation, for operating loss and net loss, the most closely comparable GAAP measures with respect to non-GAAP operating income, Adjusted EBITDA and non-GAAP net income, and net cash used in operating activities, the most closely comparable measure with respect to Adjusted Unlevered Free Cash Flow, because Instructure cannot provide a meaningful or accurate calculation or estimation of certain reconciling items without unreasonable effort. This is due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including stock-based compensation and amortization of acquisition-related intangibles. Thus, Instructure is unable to present a quantitative reconciliation of non-GAAP guidance to GAAP guidance because such information is not available.

Effective January 1, 2022, Instructure adopted ASU No. 2021-08, Business Combinations (Topic 805), which requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606). As a result, Instructure will no longer present guidance for ACR because GAAP revenue and ACR have now converged.


Conference Call Information

Instructure’s management team will hold a conference call to discuss our first quarter ended March 31, 2023 results today, May 1, 2023 at 5:00 p.m. ET. The conference call can be accessed by dialing (888) 330-2384 from the United States and Canada or (240) 789-2701 internationally with conference ID 1348899. A live webcast and replay of the conference call can be accessed from the investor relations page of Instructure’s website at ir.instructure.com. An archived replay of the webcast will be available following the conclusion of the call.

About Instructure

Instructure (NYSE: INST) is an education technology company dedicated to elevating student success, amplifying the power of teaching, and inspiring everyone to learn together. Today the Instructure Learning Platform supports tens of millions of educators and learners around the world. Learn more at www.instructure.com.

Non-GAAP Financial Measures

Instructure has provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). In addition to Instructure’s results determined in accordance with GAAP, Instructure believes the following non-GAAP measures are useful in evaluating its operating performance and liquidity. Instructure believes that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. The non-GAAP financial information is presented for supplemental informational purposes only, and should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by other companies.

A reconciliation of Instructure’s historical non-GAAP financial measures to the most directly comparable GAAP measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation.

ACR. We define ACR as the combined receipts of our Company and companies that we have acquired allocated to the period of service delivery. We calculate ACR as the sum of (i) revenue and (ii) the impact of fair value adjustments to acquired unearned revenue related to Thoma Bravo’s acquisition of Instructure (the “Take-Private Transaction”) and the Certica Holdings, LLC (“Certica”), Eesysoft Software International B.V. (which was rebranded to “Impact by Instructure” or “Impact” subsequent to acquisition), and Kimono LLC (which was rebranded to “Elevate Data Sync” subsequent to acquisition) acquisitions where we do not believe such adjustments are reflective of our ongoing operations. Management uses this measure to evaluate the organic growth of the business period over period, as if the Company had operated as a single entity and excluding the impact of acquisitions or adjustments due to purchase accounting.
 

Non-GAAP Operating Income. We define non-GAAP operating income as loss from operations excluding the impact of stock-based compensation, transaction costs, sponsor costs, other non-recurring costs, amortization of acquisition-related intangibles, and the impact of fair value adjustments to acquired unearned revenue relating to the Take-Private Transaction and the Certica, Impact, and Elevate Data Sync acquisitions that we do not believe are reflective of our ongoing operations. We believe non-GAAP operating income is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance. Although we exclude the amortization of acquisition-related intangibles from the non-GAAP measure, management believes it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.
 


Non-GAAP Net Income. We define non-GAAP net income as net loss excluding the impact of stock-based compensation, amortization of acquisition-related intangibles, the impact of fair value adjustments to acquired unearned revenue relating to the Take-Private Transaction and the Certica, Impact, and Elevate Data Sync acquisitions, transaction costs, sponsor costs, other non-recurring costs, and effects of foreign currency transaction gains that we do not believe are reflective of our ongoing operations. The tax effects of the adjustments are calculated using the statutory tax rate, taking into consideration the nature of the item and the relevant taxing jurisdiction. We believe Non-GAAP net income is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance. Although we exclude the amortization of acquisition-related intangibles from the non-GAAP measure, management believes it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation. Basic non-GAAP net income per common share attributable to common stockholders is computed by dividing non-GAAP net income attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted non-GAAP net income per common share attributable to common stockholders is computed by giving effect to all potentially dilutive common stock equivalents outstanding for the period.

Adjusted EBITDA; Adjusted EBITDA Margin. EBITDA is defined as earnings before debt-related costs, including interest and loss on debt extinguishment, benefit for taxes, depreciation, and amortization. We further adjust EBITDA to exclude certain items of a significant or unusual nature, including stock-based compensation, transaction costs, sponsor costs, other non-recurring costs, effects of foreign currency transaction (gains) and losses, amortization of acquisition-related intangibles, and the impact of fair value adjustments to acquired unearned revenue relating to the Take-Private Transaction and the Certica, Impact, and Elevate Data Sync acquisitions. Although we exclude the amortization of acquisition-related intangibles from this non-GAAP measure, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by ACR.

Free Cash Flow, Unlevered Free Cash Flow and Adjusted Unlevered Free Cash Flow. We define free cash flow as net cash used in operating activities less purchases of property and equipment and intangible assets, net of proceeds from disposals of property and equipment. We define unlevered free cash flow as free cash flow adjusted for cash paid for interest on outstanding debt and cash settled stock-based compensation. We define adjusted unlevered free cash flow as unlevered free cash flow adjusted for transaction costs, sponsor costs, impaired leases, and other non-recurring costs paid in cash. We believe free cash flow, unlevered free cash flow and adjusted unlevered free cash flow facilitate period-to-period comparisons of liquidity. We consider free cash flow, unlevered free cash flow and adjusted unlevered free cash flow to be important measures because they measure the amount of cash we generate and reflect changes in working capital.

 

Non-GAAP Cost of Revenue and Non-GAAP Operating Expenses. We define non-GAAP cost of revenue and non-GAAP operating expenses as GAAP cost of revenue and GAAP operating expenses, respectively, excluding the impact of stock-based compensation, transaction costs, sponsor costs, other non-recurring costs, and amortization of acquisition-related intangibles that we do not believe are reflective of our ongoing operations. Although we exclude the amortization of acquisition-related intangibles from the non-GAAP measures, management believes it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.

 

Non-GAAP Gross Profit; Non-GAAP Gross Profit Margin. We define non-GAAP gross profit as gross profit excluding the impact of stock-based compensation, transaction costs, other non-recurring costs, amortization of acquisition-related intangibles, and fair value adjustments to deferred revenue in connection with purchase accounting that we do not believe are reflective of our ongoing operations. Although we exclude the amortization of acquisition-related intangibles from the non-GAAP measure, management believes it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation. Non-GAAP Gross Profit Margin is defined as Non-GAAP gross profit divided by ACR.

 


Forward-Looking Statements

This press release contains, and statements made during the above referenced conference call will contain, “forward-looking” statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding the Company’s financial guidance for the second quarter of 2023 and for the full year ending December 31, 2023, the Company’s growth, customer demand and application adoption, the Company’s research and development efforts and future application releases, and the Company’s expectations regarding future revenue, expenses, cash flows and net income or loss.

These statements are not guarantees of future performance, but are based on management’s expectations as of the date of this press release and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements. Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include the following: risks associated with the continued economic uncertainty, including record-high inflation, supply chain challenges, labor shortages, high interest rates, foreign currency exchange volatility, concerns of economic slowdown or recession and reduced spending by customers; failure to continue our recent growth rates; risks associated with future stimulus packages approved by the U.S. federal government; our ability to acquire new customers and successfully retain existing customers; the effects of increased usage of, or interruptions or performance problems associated with, our learning platform; the impact on our business and prospects from pandemics and the ongoing effects of the COVID-19 pandemic; our history of losses and expectation that we will not be profitable for the foreseeable future; the impact of adverse general and industry-specific economic and market conditions; failure to manage our growth effectively; and changes in the spending policies or budget priorities for government funding of Higher Education and K-12 institutions.

These and other important risk factors are described more fully in the Company’s most recent Annual Report on Form 10-K and subsequent Quarterly Report on Form 10-Q and other documents filed with the Securities and Exchange Commission and could cause actual results to vary from expectations. All information provided in this press release and in the conference call is as of the date hereof and Instructure undertakes no duty to update this information except as required by law.

 


INSTRUCTURE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

 

 

March 31,
2023

 

 

December 31,
2022

 

 

Assets

 

(unaudited)

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

104,758

 

 

$

185,954

 

 

Accounts receivable—net

 

 

63,505

 

 

 

71,428

 

 

Prepaid expenses

 

 

44,427

 

 

 

11,120

 

 

Deferred commissions

 

 

14,482

 

 

 

13,390

 

 

Other current assets

 

 

2,782

 

 

 

3,144

 

 

Total current assets

 

 

229,954

 

 

 

285,036

 

 

Property and equipment, net

 

 

12,249

 

 

 

12,380

 

 

Right-of-use assets

 

 

12,584

 

 

 

13,575

 

 

Goodwill

 

 

1,266,402

 

 

 

1,266,402

 

 

Intangible assets, net

 

 

506,930

 

 

 

542,679

 

 

Noncurrent prepaid expenses

 

 

7,427

 

 

 

871

 

 

Deferred commissions, net of current portion

 

 

16,745

 

 

 

18,781

 

 

Deferred tax assets

 

 

7,925

 

 

 

8,143

 

 

Other assets

 

 

5,654

 

 

 

5,622

 

 

Total assets

 

$

2,065,870

 

 

$

2,153,489

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

13,765

 

 

$

18,792

 

 

Accrued liabilities

 

 

26,213

 

 

 

28,483

 

 

Lease liabilities

 

 

7,099

 

 

 

7,205

 

 

Long-term debt, current

 

 

4,013

 

 

 

4,013

 

 

Deferred revenue

 

 

203,231

 

 

 

275,564

 

 

Total current liabilities

 

 

254,321

 

 

 

334,057

 

 

Long-term debt, net of current portion

 

 

485,468

 

 

 

486,471

 

 

Deferred revenue, net of current portion

 

 

12,491

 

 

 

13,816

 

 

Lease liabilities, net of current portion

 

 

14,804

 

 

 

16,610

 

 

Deferred tax liabilities

 

 

21,425

 

 

 

24,702

 

 

Other long-term liabilities

 

 

1,382

 

 

 

1,706

 

 

Total liabilities

 

 

789,891

 

 

 

877,362

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Common stock

 

 

1,435

 

 

 

1,429

 

 

Additional paid-in capital

 

 

1,587,303

 

 

 

1,575,600

 

 

Accumulated deficit

 

 

(312,759

)

 

 

(300,902

)

 

Total stockholders’ equity

 

 

1,275,979

 

 

 

1,276,127

 

 

Total liabilities and stockholders’ equity

 

$

2,065,870

 

 

$

2,153,489

 

 

 

 


INSTRUCTURE HOLDINGS, INC.

 

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

 

(in thousands, except per share data)

 

 

 

Three months
ended March 31,

 

 

 

2023

 

 

2022

 

 

 

(unaudited)

 

Revenue:

 

 

 

 

 

 

Subscription and support

 

$

118,480

 

 

$

103,492

 

Professional services and other

 

 

10,363

 

 

 

9,970

 

Total revenue

 

 

128,843

 

 

 

113,462

 

Cost of revenue:

 

 

 

 

 

 

Subscription and support

 

 

38,810

 

 

 

35,546

 

Professional services and other

 

 

7,022

 

 

 

5,465

 

Total cost of revenue

 

 

45,832

 

 

 

41,011

 

Gross profit

 

 

83,011

 

 

 

72,451

 

Operating expenses:

 

 

 

 

 

 

Sales and marketing

 

 

50,850

 

 

 

43,321

 

Research and development

 

 

23,702

 

 

 

17,201

 

General and administrative

 

 

14,373

 

 

 

15,616

 

Total operating expenses

 

 

88,925

 

 

 

76,138

 

Loss from operations

 

 

(5,914

)

 

 

(3,687

)

Other income (expense):

 

 

 

 

 

 

Interest income

 

 

1,341

 

 

 

36

 

Interest expense

 

 

(9,485

)

 

 

(4,553

)

Other income

 

 

76

 

 

 

306

 

Total other income (expense), net

 

 

(8,068

)

 

 

(4,211

)

Loss before income taxes

 

 

(13,982

)

 

 

(7,898

)

Income tax benefit

 

 

2,125

 

 

 

2,353

 

Net loss and comprehensive loss

 

$

(11,857

)

 

$

(5,545

)

Net loss per common share, basic and diluted

 

$

(0.08

)

 

$

(0.04

)

Weighted-average common shares used in computing basic and diluted net loss per common share

 

 

143,112

 

 

 

140,952

 

 

 


INSTRUCTURE HOLDINGS, INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(in thousands)

 

 

 

Three months
ended March 31,

 

 

 

2023

 

 

2022

 

 

 

(unaudited)

 

Operating Activities:

 

 

 

 

 

 

Net loss

 

$

(11,857

)

 

$

(5,545

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

Depreciation of property and equipment

 

 

1,203

 

 

 

1,004

 

Amortization of intangible assets

 

 

35,749

 

 

 

33,741

 

Amortization of deferred financing costs

 

 

294

 

 

 

294

 

Stock-based compensation

 

 

9,635

 

 

 

7,813

 

Deferred income taxes

 

 

(3,059

)

 

 

(3,411

)

Other

 

 

181

 

 

 

(360

)

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

7,629

 

 

 

14,779

 

Prepaid expenses and other assets

 

 

(39,557

)

 

 

(34,733

)

Deferred commissions

 

 

944

 

 

 

304

 

Right-of-use assets

 

 

991

 

 

 

1,197

 

Accounts payable and accrued liabilities

 

 

(7,177

)

 

 

(11,746

)

Deferred revenue

 

 

(73,658

)

 

 

(66,701

)

Lease liabilities

 

 

(1,912

)

 

 

(1,468

)

Other liabilities

 

 

(324

)

 

 

(1,113

)

Net cash used in operating activities

 

 

(80,918

)

 

 

(65,945

)

Investing Activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(1,327

)

 

 

(1,333

)

Proceeds from sale of property and equipment

 

 

6

 

 

 

22

 

Net cash used in investing activities

 

 

(1,321

)

 

 

(1,311

)

Financing Activities:

 

 

 

 

 

 

Proceeds from issuance of common stock from employee equity plans

 

 

3,295

 

 

 

4,076

 

Shares repurchased for tax withholdings on vesting of restricted stock units

 

 

(1,279

)

 

 

(1,263

)

Repayments of long-term debt

 

 

(1,250

)

 

 

 

Net cash provided by financing activities

 

 

766

 

 

 

2,813

 

Foreign currency impacts on cash, cash equivalents and restricted cash

 

 

301

 

 

 

590

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(81,172

)

 

 

(63,853

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

190,266

 

 

 

169,152

 

Cash, cash equivalents and restricted cash, end of period

 

$

109,094

 

 

$

105,299

 

Supplemental cash flow disclosure:

 

 

 

 

 

 

Cash paid for taxes

 

$

181

 

 

$

69

 

Interest paid

 

$

8,096

 

 

$

1,424

 

Non-cash investing and financing activities:

 

 

 

 

 

 

Capital expenditures incurred but not yet paid

 

$

186

 

 

$

119

 

 

 

 

RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES


 

INSTRUCTURE HOLDINGS, INC.

 

RECONCILIATION OF NON-GAAP ALLOCATED COMBINED RECEIPTS

 

(in thousands)

 

(unaudited)

 

 

 

Three months
ended March 31,

 

 

 

2023

 

 

2022

 

Revenue

 

$

128,843

 

 

$

113,462

 

Fair value adjustments to deferred revenue in connection with purchase accounting

 

 

 

 

 

499

 

Allocated combined receipts

 

$

128,843

 

 

$

113,961

 

 

 


INSTRUCTURE HOLDINGS, INC.

 

RECONCILIATION OF NON-GAAP OPERATING INCOME

 

(in thousands)

 

(unaudited)

 

 

 

Three months
ended March 31,

 

 

 

2023

 

 

2022

 

Loss from operations

 

$

(5,914

)

 

$

(3,687

)

Stock-based compensation

 

 

10,010

 

 

 

9,476

 

Transaction costs(1)

 

 

3,836

 

 

 

1,424

 

Sponsor costs(2)

 

 

58

 

 

 

134

 

Other non-recurring costs(3)

 

 

3,449

 

 

 

912

 

Amortization of acquisition-related intangibles

 

 

35,748

 

 

 

33,739

 

Fair value adjustments to deferred revenue in connection with purchase accounting

 

 

 

 

 

499

 

Non-GAAP operating income

 

$

47,187

 

 

$

42,497

 


 

INSTRUCTURE HOLDINGS, INC.

 

RECONCILIATION OF NON-GAAP ADJUSTED EBITDA

 

(in thousands)

 

(unaudited)

 

 

 

Three months
ended March 31,

 

 

 

2023

 

 

2022

 

Net loss

 

$

(11,857

)

 

$

(5,545

)

Interest on outstanding debt

 

 

9,485

 

 

 

4,553

 

Benefit for taxes

 

 

(2,125

)

 

 

(2,353

)

Depreciation

 

 

1,203

 

 

 

1,004

 

Amortization

 

 

2

 

 

 

2

 

Stock-based compensation

 

 

10,010

 

 

 

9,476

 

Transaction costs(1)

 

 

3,836

 

 

 

1,424

 

Sponsor costs(2)

 

 

58

 

 

 

134

 

Other non-recurring costs(4)

 

 

3,550

 

 

 

912

 

Effects of foreign currency transaction gains

 

 

(351

)

 

 

(292

)

Amortization of acquisition-related intangibles

 

 

35,748

 

 

 

33,739

 

Interest income

 

 

(1,301

)

 

 

 

Fair value adjustments to deferred revenue in connection with purchase accounting

 

 

 

 

 

499

 

Adjusted EBITDA

 

$

48,258

 

 

$

43,553

 

 

 

 

 

 

 

 

Net loss margin

 

 

(9.2

)%

 

 

(4.9

)%

Adjusted EBITDA margin

 

 

37.5

%

 

 

38.2

%

 

 

INSTRUCTURE HOLDINGS, INC.

 

RECONCILIATION OF FREE CASH FLOW, UNLEVERED FREE CASH FLOW & ADJUSTED UNLEVERED FREE CASH FLOW

 

(in thousands)

 

(unaudited)

 

 

 

Three months
ended March 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

$

(80,918

)

 

$

(65,945

)

Purchases of property and equipment

 

 

(1,327

)

 

 

(1,333

)

Proceeds from disposals of property and equipment

 

 

6

 

 

 

22

 

Free cash flow

 

$

(82,239

)

 

$

(67,256

)

Cash paid for interest on outstanding debt

 

 

8,096

 

 

 

1,424

 

Cash settled stock-based compensation

 

 

374

 

 

 

1,664

 

Unlevered free cash flow

 

$

(73,769

)

 

$

(64,168

)

Transaction costs(1)

 

 

6,754

 

 

 

2,662

 

Sponsor costs(2)

 

 

57

 

 

 

50

 

Impaired leases

 

 

345

 

 

 

 

Other non-recurring costs(5)

 

 

3,169

 

 

 

1,166

 

Adjusted unlevered free cash flow

 

$

(63,444

)

 

$

(60,290

)


 


INSTRUCTURE HOLDINGS, INC.

 

RECONCILIATION OF NON-GAAP NET INCOME

 

(in thousands, except per share data)

 

(unaudited)

 

 

 

Three months
ended March 31,

 

 

 

2023

 

 

2022

 

Net loss

 

$

(11,857

)

 

$

(5,545

)

Stock-based compensation

 

 

10,010

 

 

 

9,476

 

Amortization of acquisition-related intangibles

 

 

35,748

 

 

 

33,739

 

Fair value adjustments to deferred revenue in connection with purchase accounting

 

 

 

 

 

499

 

Transaction costs(1)

 

 

3,836

 

 

 

1,424

 

Sponsor costs(2)

 

 

58

 

 

 

134

 

Other non-recurring costs(4)

 

 

3,550

 

 

 

912

 

Effects of foreign currency transaction gains

 

 

(351

)

 

 

(292

)

Tax effects of adjustments(6)

 

 

(13,118

)

 

 

(11,421

)

Non-GAAP net income

 

$

27,876

 

 

$

28,926

 

Non-GAAP net income per common share, basic

 

$

0.19

 

 

$

0.21

 

Non-GAAP net income per common share, diluted

 

$

0.19

 

 

$

0.20

 

Weighted average common shares used in computing basic Non-GAAP net income per common share

 

 

143,112

 

 

 

140,952

 

Weighted average common shares used in computing diluted Non-GAAP net income per common share

 

 

144,765

 

 

 

142,710

 

 

 

INSTRUCTURE HOLDINGS, INC.

 

RECONCILIATION OF NON-GAAP GROSS PROFIT

 

(in thousands)

 

(unaudited)

 

 

 

Three months
ended March 31,

 

 

 

2023

 

 

2022

 

Gross profit

 

$

83,011

 

 

$

72,451

 

Stock-based compensation

 

 

793

 

 

 

658

 

Transaction costs(1)

 

 

180

 

 

 

44

 

Other non-recurring costs

 

 

339

 

 

 

19

 

Amortization of acquisition-related intangibles

 

 

16,073

 

 

 

15,690

 

Fair value adjustments to deferred revenue in connection with purchase accounting

 

 

 

 

 

499

 

Non-GAAP gross profit

 

$

100,396

 

 

$

89,361

 

 

 

 

 

 

 

 

GAAP gross margin

 

 

64.4

%

 

 

63.9

%

Non-GAAP gross margin

 

 

77.9

%

 

 

78.4

%

 

 

INSTRUCTURE HOLDINGS, INC.

 

RECONCILIATION OF NET DEBT

 

(in thousands)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

March 31,
2023

 

 

December 31,
2022

 

Long-term debt, current

 

$

4,013

 

 

$

4,013

 

Long-term debt, net of current portion

 

 

485,468

 

 

 

486,471

 

Cash, cash equivalents and restricted cash

 

 

(109,094

)

 

 

(190,266

)

Net debt

 

$

380,387

 

 

$

300,218

 

 

 


INSTRUCTURE HOLDINGS, INC.

 

RECONCILIATION OF TRAILING TWELVE MONTHS NON-GAAP ADJUSTED EBITDA

 

(in thousands)

 

(unaudited)

 

 

 

March 31,

 

 

 

2023

 

Net loss

 

$

(40,554

)

Interest on outstanding debt

 

 

29,523

 

Benefit for taxes

 

 

(7,904

)

Depreciation

 

 

4,690

 

Amortization

 

 

7

 

Stock-based compensation

 

 

40,313

 

Transaction costs(1)

 

 

11,535

 

Sponsor costs(2)

 

 

441

 

Other non-recurring costs(7)

 

 

6,003

 

Effects of foreign currency transaction losses

 

 

2,455

 

Amortization of acquisition-related intangibles

 

 

138,719

 

Interest income

 

 

(1,301

)

Fair value adjustments to deferred revenue in connection with purchase accounting

 

 

369

 

Adjusted EBITDA

 

$

184,296

 

 

 

INSTRUCTURE HOLDINGS, INC.

 

RECONCILIATION OF NON-GAAP COST OF REVENUE

 

Three Months Ended March 31, 2023

 

(in thousands)

 

(unaudited)

 

 

 

GAAP

 

 

Stock-based compensation expense

 

 

Transaction Costs

 

 

Other non-recurring costs

 

 

Amortization of acquired intangibles

 

 

Non-GAAP

 

Cost of Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription and support

 

$

38,810

 

 

$

(379

)

 

$

(160

)

 

$

(134

)

 

$

(16,073

)

 

$

22,064

 

Professional services and other

 

 

7,022

 

 

 

(414

)

 

 

(20

)

 

 

(205

)

 

 

 

 

 

6,383

 

Total cost of revenue

 

$

45,832

 

 

$

(793

)

 

$

(180

)

 

$

(339

)

 

$

(16,073

)

 

$

28,447

 

 

 

INSTRUCTURE HOLDINGS, INC.

 

RECONCILIATION OF NON-GAAP COST OF REVENUE

 

Three Months Ended March 31, 2022

 

(in thousands)

 

(unaudited)

 

 

 

GAAP

 

 

Stock-based compensation expense

 

 

Transaction Costs

 

 

Other non-recurring costs

 

 

Amortization of acquired intangibles

 

 

Non-GAAP

 

Cost of Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription and support

 

$

35,546

 

 

$

(282

)

 

$

 

 

$

(9

)

 

$

(15,690

)

 

$

19,565

 

Professional services and other

 

 

5,465

 

 

 

(376

)

 

 

(44

)

 

 

(10

)

 

 

 

 

 

5,035

 

Total cost of revenue

 

$

41,011

 

 

$

(658

)

 

$

(44

)

 

$

(19

)

 

$

(15,690

)

 

$

24,600

 

 

 

INSTRUCTURE HOLDINGS, INC.

 

RECONCILIATION OF NON-GAAP OPERATING EXPENSES

 

Three Months Ended March 31, 2023

 

(in thousands)

 

(unaudited)

 

 

 

GAAP

 

 

Stock-based compensation expense

 

 

Transaction costs

 

 

Sponsor costs

 

 

Other non-recurring costs

 

 

Amortization of acquired intangibles

 

 

Non-GAAP

 

 

GAAP % of revenue

 

 

Non-GAAP % of ACR

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

$

50,850

 

 

$

(2,528

)

 

$

(628

)

 

$

 

 

$

(1,131

)

 

$

(19,670

)

 

$

26,893

 

 

 

39.5

%

 

 

20.9

%

Research and development

 

 

23,702

 

 

 

(3,174

)

 

 

(2,241

)

 

 

 

 

 

(1,327

)

 

 

(5

)

 

 

16,955

 

 

 

18.4

%

 

 

13.2

%

General and administrative

 

 

14,373

 

 

 

(3,515

)

 

 

(787

)

 

 

(58

)

 

 

(652

)

 

 

 

 

 

9,361

 

 

 

11.2

%

 

 

7.3

%

Total operating expenses

 

$

88,925

 

 

$

(9,217

)

 

$

(3,656

)

 

$

(58

)

 

$

(3,110

)

 

$

(19,675

)

 

$

53,209

 

 

 

69.1

%

 

 

41.4

%

 


 

INSTRUCTURE HOLDINGS, INC.

 

RECONCILIATION OF NON-GAAP OPERATING EXPENSES

 

Three Months Ended March 31, 2022

 

(in thousands)

 

(unaudited)

 

 

 

GAAP

 

 

Stock-based compensation expense

 

 

Transaction costs

 

 

Sponsor costs

 

 

Other non-recurring costs

 

 

Amortization of acquired intangibles

 

 

Non-GAAP

 

 

GAAP % of revenue

 

 

Non-GAAP % ACR

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

$

43,321

 

 

$

(2,577

)

 

$

(9

)

 

$

 

 

$

(271

)

 

$

(18,049

)

 

$

22,415

 

 

 

38.2

%

 

 

19.7

%

Research and development

 

 

17,201

 

 

 

(2,540

)

 

 

(97

)

 

 

 

 

 

(193

)

 

 

 

 

 

14,371

 

 

 

15.2

%

 

 

12.6

%

General and administrative

 

 

15,616

 

 

 

(3,701

)

 

 

(1,273

)

 

 

(134

)

 

 

(430

)

 

 

 

 

 

10,078

 

 

 

13.8

%

 

 

8.8

%

Total operating expenses

 

$

76,138

 

 

$

(8,818

)

 

$

(1,379

)

 

$

(134

)

 

$

(894

)

 

$

(18,049

)

 

$

46,864

 

 

 

67.2

%

 

 

41.1

%

 

 

FOOTNOTES

(1) Represents expenses incurred with third parties as part of the Company’s merger and acquisition activity, including due diligence, closing and post-close integration activities.

 

(2) Represents expenses incurred for services provided by Thoma Bravo and their affiliates.

 

(3) Includes other non-recurring costs as follows (in thousands):

 

Three months
ended March 31,

 

 

 

2023

 

 

2022

 

Contract modification fees

 

 

115

 

 

 

230

 

Employee severance

 

 

1,859

 

 

 

65

 

Workforce realignment costs

 

 

1,060

 

 

 

354

 

Other insignificant non-recurring costs

 

 

415

 

 

 

263

 

Total other non-recurring costs

 

$

3,449

 

 

$

912

 

 

(4) Includes other non-recurring costs as follows (in thousands):

 

Three months
ended March 31,

 

 

 

2023

 

 

2022

 

Loss on exit of leased properties

 

 

101

 

 

 

 

Contract modification fees

 

 

115

 

 

 

230

 

Employee severance

 

 

1,859

 

 

 

65

 

Workforce realignment costs

 

 

1,060

 

 

 

354

 

Other insignificant non-recurring costs

 

 

415

 

 

 

263

 

Total other non-recurring costs

 

$

3,550

 

 

$

912

 

 

(5) Includes other non-recurring costs paid in cash as follows (in thousands):

 

Three months
ended March 31,

 

 

 

2023

 

 

2022

 

Employee severance

 

$

1,669

 

 

$

65

 

Workforce realignment costs

 

 

1,060

 

 

 

215

 

Other insignificant non-recurring costs

 

 

440

 

 

 

886

 

Total other non-recurring costs paid in cash

 

$

3,169

 

 

$

1,166

 

 

(6) During the fourth quarter of 2022, we revised the methodology for calculating Non-GAAP Net Income (see Non-GAAP Financial Measures above for details). The table above includes the tax effects of the adjustments calculated by using the statutory tax rate, taking into consideration the nature of the item and the relevant taxing jurisdiction.

 

 

 

 

 

 

 


 

(7) Includes other non-recurring costs as follows (in thousands):

 

March 31,

 

 

 

2023

 

Loss on exit of leased properties

 

 

101

 

Contract modification fees

 

 

115

 

Employee severance

 

 

2,538

 

Workforce realignment costs

 

 

2,094

 

Other insignificant non-recurring costs

 

 

1,155

 

Total other non-recurring costs

 

$

6,003

 

 

For More Information:


Media Relations:
Brian Watkins
Corporate Communications
Instructure
(801) 610-9722
brian.watkins@instructure.com

Investor Relations:
April Scee
Managing Director
ICR, Inc.
(917) 497-8992
april.scee@icrinc.com